Press Releases

California 3rd in Nation in High Hospital Charges

New data released by the nation’s largest nurses’ organization reveals that California hospitals are among the most costly in the nation, helping fuel a growing scandal of high hospital charges and costs.

California ranks third nationally in how high it sets its charges over its costs, with a statewide average charge of 451 percent as a percent of total costs. In other words, the average California hospital charges $451 for every $100 of its total costs. That’s well above the national average of 331 percent.

Top 10 Most Expensive Hospitals – California (by total charges as a percent of total costs)

The new findings are based on publicly available Medicare Cost Reports as of June, 2013, covering the fiscal year 2011-2012, analyzed by the Institute for Health and Socio-Economic Research, the research arm of National Nurses United. For the charge to cost ratio for other California hospitals, call 510-273-2246.

IHSP/NNU also released the top 100 most expensive U.S. hospitals, top 10 for each state, and statewide averages.

The 100 most expensive U.S. hospitals have a charge to cost ratio of 765 percent and higher – more than double the national average of 331 percent.

Despite enactment of the Affordable Care Act, hospital charges recorded their single biggest jump, a 22 percentile point increase from fiscal year 2010-2011 to fiscal year 2011-2012 in the past 16 years for which the IHSP has analyzed the data.

There is a strong correlation between high charges and profits. The 10 percent of hospitals with the highest charges over their costs have the largest average profits.

For-profit hospitals continue to dominate the list of those with the highest charges. For-profit corporations average charges of 503 percent of their costs, or $503 for every $100 of total costs.

By contrast, publicly-run hospitals, including federal, state, county, city, or district operated hospitals, with public budgets and boards that meet in public, exercise far more restraint than for-profit or non-profit corporate chains. Average charge ratios for government-run hospitals are just 235 percent of their costs.

Public oversight, or regulation seems to help constrain excessive pricing. Maryland, probably the most regulated state in the U.S. has the lowest average charges of all the states among its 10 most expensive hospitals.

While Medicare sets reimbursement rates, insurance companies typically negotiate with hospitals on reimbursements. But the higher the charges, says NNU, the greater the ultimate reimbursement that insurers pay. Predictably, insurers will pass those increased costs to ratepayers, with resulting higher premiums, co-pays, deductibles, and other fees for patients and families.

Uninsured individuals with far less bargaining power are too often hit with the full list price. Hospitals increasingly tack on steep co-pays, require cash up front before administering care, or hound patients for payment afterwards.

Globally, a Commonwealth Fund study of 11 developed nations released in November found that U.S. adults are the most likely to forego treatment due to cost, struggle to pay bills, and spend the most out of pocket on medical care. In 2013, it found, 37 percent of U.S. adults failed to see a doctor, didn’t seek recommended treatment or did not fill a prescription because of the high cost – compared to just 4 percent of those in Great Britain.

The global data, says NNU co-president Deborah Burger, RN illustrates why the need for “fundamental transformation of our broken healthcare system to one based on patient need and quality care for all remains critical.” Noting the health security for Americans changes dramatically at 65, the age for which people qualify for Medicare, Burger notes, nurses will continue to advocate for the “best solution – improving and expanding Medicare to cover everyone.”